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This week, AMD reported on its Q1 earnings (PDF), and though there were some bright spots regarding its CPU sales, the gaming division is not doing too well these days. On the call, CEO Dr. Lisa Su revealed the company’s gaming business is facing challenges affecting both discrete GPU sales and that of next-gen consoles with its semi-custom GPUs.
Dr. Su stated gaming sales are down 48% year-over-year, a shocking decline. A year is long, and a lot can happen during that period. Still, she noted sales are also down a whopping 33% from the previous quarter, indicating a terrible period for the Radeon business. On the call via The Motley Fool, it’s notable that Dr. Su detailed each segment of its earnings. Still, the discussion of gaming revenue didn’t include any explanations or much context for the numbers. She said, “Revenue declined 48% year over year and 33% sequentially to $922 million. First-quarter semi-custom SoC sales declined in line with our projections as we are now in the fifth year of the console cycle.”
It was a rough quarter for Radeon, due to “lower semi-custom and Radeon sales.”
Credit: AMD
The only additional information offered on the call was that the company launched the Radeon RX 7900 GRE and Fluid Motion Frames to compete with Nvidia’s DLSS 3 frame generation. She did note that next-gen console sales have also been dragging down the company’s semi-custom GPU sales, but that’s not AMD’s fault. The drop off in sales of its discrete GPUs is AMD’s problem, though, leading us to wonder if it can mount a comeback with RDNA 4. Given the rumors that AMD will abandon the high-end market, it’s hard to say how that will shake out, but it’s not looking good.
In the future, it seems likely AMD will have to prioritize its money makers, which are CPUs for data center and client, and GPUs for data centers. Dr. Su noted on the call that CPU sales for data center and client grew by more than 80% YoY, a far cry from its dismal GPU earnings. She also said AMD expects to earn $4 billion on its data center GPUs this year alone and that those GPUs—the MI300 family— have earned $1 billion in revenue faster than any product in the company’s history. Given this scenario, nobody would fault AMD for leaning into its more profitable businesses. However, that could be bad news for gamers who have been hoping AMD would continue to put up a good fight against Nvidia.